Canadian Journal of Administrative Sciences
Revue canadienne des sciences de l’administration
27: 76–77 (2010)
Published online in Wiley Interscience (www.interscience.wiley.com). DOI: 10.1002/CJAS.142
Resources, Capabilities, and Service:
Commentary on “Dynamic Capabilities
and e-Service”
Paul P. Maglio*
IBM Research—Almaden
Let me start with some definitions before commenting on Rolland, Patterson, and Ward’s (2009) article,
“Dynamic Capabilities and e-Service,” in the first of two
special issues on e-Service. Service is value cocreation—a process in which multiple parties interact,
access, and make use of one another’s resources to create
value together (Spohrer & Maglio, 2010). To make use
of resources, an agent deploys its competences or capabilities (Vargo & Lusch, 2004). Multiple parties interact
in a service relationship when all capabilities and
resources needed to accomplish a goal do not lie solely
within the boundaries of a single party (Maglio, Vargo,
Caswell, & Spohrer, 2009).
For example, if I need the oil changed in my car, I
can do it myself if I know how and have the time (capability), and if I have the right wrenches and other tools
(resources). Or, I can contact the repair shop down the
street that advertises oil changes, which implies it has
both the know-how and tools to get the job done. If I
choose to go to the repair shop, I have to drive my car
there, explain what is to be done, and ultimately pay the
shop for its efforts; in this case, I have deployed my
capabilities (driving), and given the shop access to my
resources (car, repair order, money). There are two sides
to this arrangement, each deploying capabilities and contributing resources to be used by the other.
Of course, it is more complicated than this. For
instance, the old oil has to be recycled, which may
require the shop to interact with yet another party, and
so on. But in the end, if my oil was changed correctly,
both the repair shop and I are (presumably) better off
than we were before. Fundamentally, all exchange is
service-for-service exchange (Vargo & Lusch, 2004),
and service requires capabilities to make use of resources
within a system of interacting entities (Spohrer, Maglio,
Bailey, & Gruhl, 2006).
Now to turn to Rolland et al.’s (2009) article.
Because I accept these definitions, I agree with the
authors that we must consider both a firm’s resources and
its capabilities to make effective strategic changes to its
offerings, such as those that include e-services for customers and employees. In particular, Rolland et al. make
a compelling case for the idea that dynamic capabilities
constitute the critical factor in creating appropriate strategic change. More importantly, they demonstrate a
framework for thinking about how to shift capabilities in
service systems—systems in which both the customer
and the firm control relevant resources and in which
capabilities can be deployed by either the customer or
the firm. The trick lies in arranging resources in a service
system so as to make use of capabilities that can be
deployed within the system most effectively. And the
relationship between resources and capabilities is key,
regardless of which party in a system owns the resources
or has the capabilities.
Rolland et al. (2009) offer a structural approach for
making strategic business decisions based on the view
that a firm’s competitive advantage depends on its differentiation in the marketplace. The interaction-space
framework highlights the places where interactions
between capabilities and resources show through to the
multiple parties of a service system—in the simplest
case, customer and firm. It connects aspects of customer
satisfaction—customer experience (interactions), access
to core services (access), physical factors (tangibles), and
results (outcome)—with firm resources—employees,
facilities, processes, customers, and external resources
and stakeholders. The interaction-space framework
makes apparent opportunities for improvement in how a
firm organizes its capabilities and resources to add value.
*Please address correspondence to: Paul P. Maglio, IBM Research—
Almaden, 650 Harry Rd., San Jose, California USA. Email: pmaglio@
almaden.ibm.com
Copyright © 2010 ASAC. Published by John Wiley & Sons, Ltd.
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Can J Adm Sci
27(1), 76–77 (2010)
RESOURCES, CAPABILITIES, AND SERVICE
MAGLIO
Yet I find these analyses—the healthcare service system
and the airline service system—to be a bit one-sided,
taken mainly from the firm’s perspective. If the essence
of service is value co-creation, interaction between customer and firm within the context of application of their
combined resources ought to be the basic unit of analysis,
not simply a subset of points in the firm’s analytical
framework. It seems to me that improvement or innovation consists in reconfiguration or rearrangement of the
system as a whole, not just firm-side resources. This was
perhaps most elegantly stated by Normann and Ramirez
(1993): “successful companies conceive of strategy as
systematic social innovation: the continuous design and
redesign of complex business systems” (p. 66). Now that
is a dynamic capability.
Consider self-service technologies, such as many
e-services. If knowledge and capabilities are critical to
creating and maintaining strategic advantage (Johnson,
Manyika & Lee, 2005; Normann & Ramirez, 1993),
where are these in self-service? Sometimes, knowledge
and capabilities are built into technologies, as when
airline check-in kiosks hide many details from users
while maintaining substantial power to address user
needs. But often, self-service technologies aim to substitute customer-side knowledge and capabilities for firmside knowledge and capabilities, and they often fail when
customers perceive mainly firm-side benefits, such as
decreased cost (Bitner, Ostrom & Meuter, 2002).
Effective self-service shifts the boundary between
firm effort and customer effort in a controlled and principled way, moving the boundary such that the customer
performs many of the tasks previously performed by the
provider; examples include (a) self-service gas stations,
(b) self-service checkout at supermarkets, and (c) selfservice hotels, where check-in and check-out does not
require interaction with hotel personnel (Campbell,
Maglio, & Davis, 2009). Another approach might be for
the provider to perform tasks previously performed by
the customer, what might be called super-service; examples include home-delivery of groceries, airlines that
pick up customers at their homes, and vendor-managed
inventories (Campbell et al.).
The key to providing effective service is in mobilizing a system of partners and customers in co-creating
value (Normann & Ramirez, 1993). With self-service,
this means focusing primarily on the value-producing
knowledge and capabilities of the customer. With superservice, this means focusing primarily on the value-
Copyright © 2010 ASAC. Published by John Wiley & Sons, Ltd.
producing knowledge and capabilities of the firm and its
ecosystem partners. Self-service should draw upon what
customers know. Super-service, in contrast, should draw
upon the capabilities of the larger firm-partner system.
Self-service creates more value overall when most of the
relevant knowledge and capability is in the customer, and
super-service creates more value overall when most of
the relevant knowledge and capability is in the firm and
its partners.
In summary, I see value created (only) out of interactions among systems of entities that deploy individual
capabilities and share resources. So I am sympathetic to
Rolland et al.’s (2009) view that service innovation
depends critically on a firm’s dynamic capabilities, and
that careful consideration of the interaction between
firm and customer can highlight opportunities for
improvement or innovation. In the end though, I would
prefer a bit more analytical focus on the interactions
between the firm and the customer (and also the extended
value-chain partners), and on the application of capabilities and resources of the service system constituents as a
whole.
References
Bitner, M.J., Ostrom, A.L., & Meuter, M.L. (2002). Implementing successful self-service technologies. Academy of
Marketing Executive, 16(4), 96–109.
Campbell, C.S., Maglio, P.P., Davis, M.M. (2009). From selfservice to super-service: How to shift the boundary
between customer and provider. Presentation at Frontiers
in Service. Honolulu, Hawaii.
Johnson, B.C., Manyika, J.M., & Yee, L.A. (2005). The next
revolution in interactions. The McKinsey Quarterly,
2005(4), 20–33.
Maglio, P.P., Vargo, S.L., Caswell, N., & Spohrer, J. (2009).
The service system is the basic abstraction of service
science. Information Systems and e-business Management, 7(4), 395–406.
Normann, R., & Ramirez, R. (1993). From value chain to value
constellation: Designing interactive strategy. Harvard
Business Review, 71(4), 65–77.
Rolland, E., Patterson, R.A., & Ward, K.F. (2009). Dynamic
capabilities and e-service. Canadian Journal of Administrative Sciences, 26(4), 301–315.
Spohrer, J. & Maglio, P.P. (2010). Service science: Toward a
smarter planet. W. Karwowski & G. Salvendy (Eds.),
Introduction to service engineering. New York: Wiley &
Sons, pp. 3–30.
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27(1), 76–77 (2010)